Epilogue

A major theme of this book has been the macroeconomic causes and consequences of global imbalances, capital flows and exchange rate movements, phenomena that remain at the forefront of international economic policy discussion. With greater international integration of goods, services and assets markets, the average size of current account imbalances in emerging and advanced economies has increased markedly over recent decades, which has concerned domestic and international financial markets and policymakers. Specifically, policymakers worry that sizeable external deficits and debt levels overexpose economies to sudden shifts in investor sentiment that may precipitate currency and financial crises and recession.